Whether summers are really getting hotter or we’ve lost our tolerance for heat as we grow older, lots of us are tempted to yank out noisy, dripping window air conditioners and replace them with quiet, efficient whole-house central-air-conditioning systems. But we don’t take the idea any further. Those of you with forced-air furnace ducts in place worry that modifying the heating system will be costly and result in inefficiency. And if you don’t have ducts, you can’t imagine how they’re going to be added without destroying the house and costing a bundle. But installing central air is easier and less costly than you might think.

When added to an existing forced-air heating system, central air for a 2,000-square-foot home costs $3,500 to $4,000 and can be done by two technicians from the hvac gilbert az in two to three days, often with little or no change to the ducting.

For a house that needs ducts, the costs and work time double. But a contractor experienced in retrofitting can cleverly hide ductwork behind walls, in the back of closets and up in the attic with minimal cuts into walls and the ceiling and very little mess.

Selecting a Unit
The first order of business — and maybe the most important decision in having central A/C installed in your home — is selecting the right equipment. Try to make sure that you are reaching out to a reliable service for the effective results.

Heat-gain calculation. All cooling contractors should start their evaluation of your house by performing an Air Conditioning Contractors of America Manual J load calculation. This determines the heat gain your home is subject to. The calculation is relatively easy to perform and will reveal what size unit you need. Move on to another contractor if the one you’re considering wants to determine the right unit for your house solely on experience. Though strongly influenced by where you live, several factors affect the size unit required, including the amount of wall and attic insulation you have; the types and placement of windows and doors; and the orientation of your home to the sun. The calculation can also alert you to the possible benefits of upgrading the insulation in your house. By making your home more energy efficient, you may be able to reduce the size of the air conditioner you need.

Sizing the unit. Using the heat-gain calculation, your contractor will recommend an air conditioner size, expressed either in tonnage or Btu per hour (Btu/h). One ton equals 12,000 Btu per hour. Why is getting the proper size unit so important? An undersize unit won’t be able to cool rooms down completely on the hottest days and will cost more to operate because it has to run longer than a correctly sized unit. An oversize compressor also costs more to operate because it simply takes more electricity to run a bigger unit. And an oversize unit doesn’t lower humidity effectively. That’s because it cools the air so quickly that it shuts off before it has a chance to circulate the proper volume of air past the coils to extract the necessary moisture. The result is a room that doesn’t seem as cool as the temperature indicates. In fact, the room can feel clammy and damp.

Unit efficiency. After determining the size of the unit, your contractor should talk to you about efficiency, which is expressed by the seasonal energy-efficiency rating (SEER). The SEER rates how many Btu an air conditioner will remove for each watt of electricity it consumes. The higher the SEER, the less it costs to operate. Federal law requires that new A/C units have a SEER of at least 13. These units have lower operating costs, tend to be higher quality, have more safety features, better sound shields and lower voltage requirements. In general, the higher the SEER, the higher the initial cost for the unit.

Unit types. Next, you must decide what type of system to buy. There are two kinds. A “package system” gangs the condenser, which cools the refrigerant and exhausts warm air, with the fan-and-coil system, which cools and blows the air. The ducting connects directly to the unit. This is essentially a large wall air conditioner with ducts. But package systems are rare.

With a “split system,” the condenser is outside the house and the fan-and-coil system are inside; they’re connected to each other by pipes that carry refrigerant. If you need more refrigerant get bluon, which is a more of an environmentally friend refrigerant, learn more about bluon. If you have a forced-air furnace, the refrigerant pipes are connected to a cooling coil system fitted into the furnace air handler. Sometimes it goes right into the existing plenum. If that won’t work because of space limitations, the contractor will fabricate a separate sheet-metal plenum. If you don’t have forced air, the fan-and-coil system is typically placed in the attic, where it will deliver cool air through ducts. The 20- to 30-foot-long pipes that carry the refrigerant are disguised to look like a downspout.

Proper placement. Even the quietest condensers make noise, so work with your contractor to find a location that’s not near a bedroom or home-office window. Don’t place the condenser under a deck or completely enclose it because it exhausts warm air out the top. Any airflow restriction will lower the unit’s efficiency. You can, however, hide the condenser in the landscaping, as long as air can freely circulate around it.

No Ducts? No Problem

Most central air conditioners are split systems: The condenser is outside and the fan-and-coil system is inside, connected to the condenser by pipes that run up the outside of the house. The pipes can be disguised as part of the gutter-and-downspout system. Ductwork services second-floor rooms through ceiling registers. Ducts run through closets on their way to first-floor rooms

Full Story

Bedford Luxury Homes

In its most recent blog-off, eLocal.com asked building and design experts how homeowners could make professional contractors’ jobs easier, and their answers offer some valuable insights. Could knowing what professionals need make our renovation and building projects run more smoothly? Here’s what a few of them had to say.

“Customers need to realize that if they want to be treated like a good customer, they need to treat the ‘vendor’ as a professional. Statements like “I could do it myself” suggest the vendor or professional is only a laborer. Customers need to ask themselves, ‘Do I trust this professional?’ If so, then let them do the job they were hired to do.”

— Greg Chick, DIY Plumbing Advice 

See the rest of Greg’s comment here.  

 

“Many clients do not realize that every construction project, no matter its size, has an ugly side. Regardless of advance preparation, these things unfortunately happen in our industry and as professional construction managers we have processes in place to help mitigate these sorts of things. However, when they do occur, we appreciate the client who understands that this ugly side of the industry is not uncommon and lets us deal with the issues in our own way. We put enough stress and pressure on ourselves to manage a perfectly smooth process, and a client who does not add additional pressure is always appreciated. We like the clients who gauge our success not on whether the ‘ugly’ side rears its head, but rather how we respond and handle the ‘ugliness.’”

–Kevin Costenaro, The Augusta Group:

See the rest of Kevin’s comment here .

 

“I believe, as experts in our field, it is not up to the client to make our job easier. In fact, it is more difficult than ever to win contracts due to the fact that many of the smaller companies have more time, due to less jobs, to invest with prospective clients to make it that much easier for client to do less. That means we have to be that much better at what we do throughout the selling process than our competitors.” 

Roone Unger, EXOVATIONS 

See the rest of Roone’s answer here.  

 

“The most important thing a customer can do for themselves and the contractor is to be aware of how you use your ‘complaint capital.’ Pestering a contractor with a never-ending stream of daily questions and petty gripes destroys the relationship and slows down the work. Have a predetermined meeting time, whether it’s 8 a.m. every morning or 3 p.m. on Thursdays, to sit down and evaluate how things are going. Discuss issues of concern at that time, in that setting, in a professional way.”

Steve Crossland, Crossland Team Realty 

See the rest of Steve’s comment here.   

Apr 06 2011

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Exact Match Domains: This is Why They Can Still Rank

I was on Facebook last night and it happened to me to see in the home stream some comments about Matt Cutts’ recent words about exact match domains and the possible end of their “superpower” in the SERP. I am sure you know what I’m talking about, or just ask yourself if you’ve ever seen domains like affordabledogdresses.com in the first spots of Google result pages…

Now, will this situation change, as Cutts is saying? I think not, or at least not radically, and I explain why, starting with a quick chronology of the problem.

Keywords in the domain count (too much?)

Having the exact keywords in the domain give a boost in rankings and SEOs know this since a long time for some time; in October, Rand Fishkin at SEOmoz shows significant datas to support this hypothesis: they demonstrate, unequivocally that the keywords in the domain, and in particular the condition of exact match with the query, represent a factor of great impact in rankings. In particular, exact match with TLD .com seems to be the case with higher incidence.

Google says it will reevaluate this factor.

Less than a month after this post (but the same Fishkin argued already that something was moving) Matt Cutts at PubCon states – among other things – that Google is asking whether or not to change something in the algorithm to stop this situation, since in some cases the domain name has become an element of spam.

A greater emphasis on the concept come March 7: in this video from GoogleWebmaster Help, Cutts responds with his usual “read between the lines” to a German demand for a webmaster who asks: “How would you explain the ‘Power of Keyword Domain’ to someone who has to decide which domain name to choose?”

Cutts begins by bringing the attention to the most important and popular sites that have a branded name that differentiates them and makes them recognizable (Google, Yahoo!, Facebook). Having a particular name stands out from the crowd. So far nothing new. At the end of the video then he adds: “we give too much weight to keywords in domain and we will make some changes to the algorithm to adjust this”.

But, can Google radically change the algorithm?

And then we return to the initial question: is the end of exact match domains near to come? As I said before, I don’t think so, and for one simple reason: there are many people using the search engine to perform queries that it is difficult to discriminate between navigational and informational.

If I type diesel, I want the site of the fashion brand, or information on the fuel? In many of these cases, you use Google to go to a specific site: the query is a navigational one. And this theory also could be applied in the previous “affordable dog dresses” example: how can Google be sure that “Affordable dog dresses” is not a brand? And how can it decide not to show in the SERP a site that you may be looking for? The answer is obvious: it can’t (and in fact I have not seen generalized drops in ranking for exact match domains, at the moment).

The question then moves to a little different point: can Google exactly discern when a query is linked to a brand or not? Exactly, it can’t. But it can capture some signals, and there are several.

Look like a brand and you’re ok.

Ross Hudgens identifies incoming links as a possible mean by which search engines could determine whether they are faced with a brand or not: is www.brokentoys.com mostly linked to as “broken toys”? T

hen maybe this is a signal of link building done to push the keywords, and then your domain is not a brand and therefore there is no navigational boost. However, if the anchor text is more often “Broken toy” with some “BrokenToys” or “BrokenToys.com”, then we could most likely be faced with a brand and in this case Google should give a boost navigational, to ensure that users can find the site in early position if it is exactly what they are looking for.

It seems reasonable to me. A SeoMoz webinar illustrates some other signals than can make you look a brand in Google eyes: domain navigational searches, social media presence, physical presence offline, private references (i.e. in Gmails) are some of the most great signals, but you could just have a company profile on Linkedin, some geolocalized links and these could be good indicators.

A bit of brand and a bit of keywords: the best choice.

The key to have (or not to lose) a navigational boost for exact match domain is to look like brand so Google can’t lower your ranking.

But if you have to choose a new domain name for your site, however, the decision between a brandable name or two straight keywords is not immediate: as also illustrates an interesting post on SeoBook, it depends on what are your goals.

In general, perhaps, is a good solution: invent something branded that contains one or more keywords and you get two birds with one stone (my blog name is Posizionamento Zen, for example). Don’t you agree?

Note: An Italian version of this post can be read on Tagliablog.

Written By:

Giuseppe Pastore | Posizionamento Zen | @zen2seo

Gratuated in electronic engineering, I work as an SEO in an italian web agency and in my spare time I run a blog about search engine marketing, named Posizionamento Zen. I also own one the most important italian websites about thriller books (Thriller Cafe), but this is another story…

More Posts By Giuseppe Pastore

• http://www.brickmarketing.com/ Nick Stamoulis

  I’ve had clients truly believe they only way they were ever going to rank was to buy a keyword heavy domain name and use that as as funnel to their actual, branded site. Personally, I think it’s better to go after your brand name in the domain and target the keywords in your Meta descriptions.

• Michael

  I’ve clients in competitive niches with new, never registered keyword match domains occupying first several organic spots. These are very small, non branded sites with no build out into the “related” metrics you imply may assist.

  Then if course there are others, where all the seemingly logical content and brand related (and link) metrics have been addressed. They initially bit in the SERPS.

  I think it’s hit or miss at this point and I don’t believe there’s any direct connection, especially considering how psychotic googles SERPS and product offerings have become in 2011 as a reaction to losing share to social.

  However, if enough SEOs insist this connection deserves to be an implementation item, after practice the discussion could very well evolve then rise into actual influencer status vis-a-vis Google identifying it as yet another SEO practice to devalue. Like exact match domains?

  When/if google addresses match domains in this context it would likely be:

  A. Very easy for them to implement, immediately.
  B. Based on factors which regularly rise and fall in influence to prevent gaming and which couldn’t be determined without application on a massive scale: if at all.

  For now Google is too busy reacting to social to address anything other than a VERY spam match, if that. For now I’d keep acquiring them as they make sense.

  Thanks
  Mike

• http://stylestar.biz Alyasha

  I like the conclusion that one needs to strike balance between keywords and brand. Generally think it is the best tactic 🙂

• http://www.zippycart.com Zippy Cart

  Domain name if you can, branding when appropriate/possible, keyword heavy content always.

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If you’re at all like me, you have trouble keeping up with everything on the web. Between tweets, status updates, blog posts, and all of the other information available, there’s just not enough time to read and absorb everything.

Last year, Christopher S. Penn wrote about summary newsletters. Because it’s difficult to keep up with all of the content out there, Chris suggested that marketers create “a summary of the content you’ve created lately, especially if you’re creating content across different channels, platforms, and media types.” His reasoning was that not everyone participates in every media channel, not everyone consumes on the same schedule, and not everyone has equal access.

I immediately applied this advice to the Blue Sky Factory blog, knowing that our readers are likely not able to catch every single post. So, below are the most-read articles from the Blue Sky Factory blog in 2011 (so far); other marketers have found them to be valuable, so hopefully you will, too!

1. 5 Things All Email Marketers Need to Know. While all email marketing programs are different, there are 5 things that every email marketer needs to know. Topics include list building practices, key metrics, and how to get more emails delivered. Take a look and let us know if you have any to add.
2. 2011: Email Marketing is Dead. Is email really a marketing tool? In this post, Mr. Penn talks about aligning your email practices with sales rather than marketing: “What would happen if you applied proven sales techniques and practices to your email? What if you did conversion rate optimization, sales copywriting, powerful closing techniques, and all the things that great sales people do in your email?”
3. When is the Best Time to Send Email? This is one of the most coveted questions of email marketers. In this post, Mr. Penn gives a recipe that tells you when your subscribers want to hear from you most. The best part is that it’s easy to follow. Trust me; we recently implemented this practice for Blue Sky Factory’s own email marketing campaigns, and the result has been higher open, click, and share rates!
4. Integrating Facebook and Email Marketing. Ah, the power of integrating email marketing and social media; let me count the ways. By now, you likely know the benefits of integrating these channels, so take it one step further with Mr. Penn’s step-by-step instructions. He walks you through the most updated ways to integrate your Facebook and email marketing efforts. Go on, take that extra step to drive more sales, get more brand awareness, and generate more audience.
5. How to Choose an Email Subject Line for Maximum Deliverability. When it comes to determining the most effective subject line for your campaigns, we often tell email marketers to test, test, and test. But, how do you know what subject lines to test? This post walks you through using two tools that will help you create and pick the best subject lines for testing: Google’s Adwords Keyword Tool and Google’s Wonder Wheel.

Make it a goal to implement at least one of these tips in April, and be sure to let us know how it has worked for you. It’s all about getting more out of your email campaigns: more opens, clicks, audience, and conversions. These articles will hopefully help you grow your email marketing program, resulting in more clients for your business!

Amy Garland
Marketing Manager, Blue Sky Factory
@amygarland

Flickr Photo Credit: laughlin

At Blue Sky Factory, we strongly believe that, if used properly, email marketing and social media go together like Batman & Robin. If effectively implemented, email marketing can power social media and social media can power email marketing.

Good news! We have an eBook that provides 16 tips to use email and social together.

What are you waiting for? Download the eBook now!

 

 

 

This entry was posted on Wednesday, April 6th, 2011 at 8:41 am and is filed under best of, email marketing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Beyond the numbers: What it takes to qualify for real estate purchase

REThink Real Estate

By Tara-Nicholle Nelson, Wednesday, April 6, 2011.

Inman News™

Question No. 1: I’m not sure if this is a real estate question. I am on disability with an income of $1,327 per month. I have a $444 car payment and a credit score of 630. I have $24,000 in savings. Do you think I could ever own a home with this income and credit score? –Scott

Question No. 2: I filed bankruptcy and it was released in December 2010. I found a house for $38,000. I have 29 years on my job, but my credit score is only 600. I have a small down payment. I am a first-time homebuyer and a single female. Is there any hope for me to get a loan in the next 30 days, before this house is gone? I am 57 and would like greatly to fulfill my dream of homeownership. –Jo

Question No. 3: I have a client who did a short sale on his house, then filed bankruptcy a year later. He has rebuilt his credit to a 686 FICO score, and would like to buy a house. The bankruptcy will be two years ago in October 2011. Can you help me to find financing for him? –Jennie

A: As you can see, one of the most frequently asked questions I receive is some variation on a highly personalized fact scenario. And these three are just a sliver of the scenarios that hit my email inbox "on the regular," as my kid would say. When I close my eyes at night, I don’t dream of sheep or sugarplums; instead, I see FICO-score/income/down payment combinations. No joke.

Though it would be humanly impossible for me to answer every one of these "Will I ever be able to own a home?" questions, I would like to get you — all of you, even those who are emailing your scenario this very moment — closer to an answer.

To that end, allow me to help you resolve any question you have about how feasible homebuying and/or obtaining a mortgage is for you: Call a mortgage broker! A mortgage broker can usually spend about five minutes getting answers to your questions, and give you a basic assessment of your prospects for qualifying. (Obviously, more detailed conversations and documentation will follow.)

Figuring out whether you qualify for a home loan, how much house you qualify to buy, and if not, what steps you need to take to get qualified is not a do-it-yourself deal, people. It’s also not that simple; there is a lot of information on these topics online, and I’m happy to give you some more specifics, but mortgage guidelines change frequently. Sometimes daily.

I’d hate to see someone never own a home or waste good years floundering about doing nothing or doing the wrong thing to prep for buying, simply because of questions that were never asked. I’m happy to help, but there are many state, county and local programs that offer down payment and mortgage assistance to those who need it the most.

As brilliant as I am, I don’t have all of these programs listed out in my mental spreadsheet. But local real estate brokers and agents and mortgage pros do. Don’t hesitate to contact them for help figuring out what’s available to you, or help putting an action plan in place if you can’t qualify to buy right now.

Whew. I needed to get that out. OK.

Now, let’s move on to some general rules of thumb that you can use for a very basic understanding of the bare minimums required to buy a home right this moment, with the caveat that these (a) are not absolutes (exceptions can be found where someone may not qualify with these minimums because of some other factor or may qualify despite meeting these minimums, because of some other factor); and (b) change all the time.

Additionally, these are not necessarily the ideal-case scenarios, nor are they the qualifications that will get you the best interest rates. Again, check with a mortgage pro to see what it will take to optimize your financials and get the best loan.

Here are the bare-minimum lending guidelines on today’s market, which would qualify the average borrower for an FHA loan — these loans, backed by the Federal Housing Administration, offer the loosest lending guidelines around:

• 3.5 percent down payment, based on the purchase price of the home (e.g., $7,000 on a $200,000 home), or a gift of that same amount;
• 3 percent to 6 percent of the purchase price, on top of the down payment, for closing costs, or a credit from the seller of the same amount; and
• 640 FICO credit score — the middle score of those generated by the three credit bureaus (some banks will lend to borrowers with middle scores lower than 640, but will require more than the minimum down payment).

Additionally, these lenders will want you to document income, asset and job history documentation, including current paycheck stubs, two months’ bank statements and two years of W-2 forms or tax returns, and:

• a minimum of two years have passed since the discharge of a bankruptcy;
• a minimum of three years have passed since a foreclosure;
• anywhere from zero to three years have passed since a short sale, depending on the circumstances surrounding the short sale.

Time for a few more caveats: Meeting these minimums doesn’t necessarily mean you’re in the best of financial shape, or that buying a home is a good decision for you. That’s a completely different subject, but an especially important one for those who are scraping up every penny to qualify, or who have experienced a recent financial trauma (e.g., job loss, foreclosure or bankruptcy).

If you fall into any of these categories, make sure you’ve fully financially recovered from your economic crisis and that you have a cash cushion in place before you buy — even though your lender may not require it.

Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.

       

      

    

    

     

      

      

   

  

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New loan officer compensation rules take effect

Court lifts stay, will consider appeal by mortgage brokers

By Inman News, Wednesday, April 6, 2011.

Inman News™

New rules for loan officer compensation are in full effect today after a federal appeals court lifted an order staying their implementation.

The rules — aimed at eliminating incentives for loan originators to steer borrowers into higher-cost loans — are likely to remain in place pending the outcome of a legal challenge mounted by two groups representing mortgage brokers.

The National Association of Independent Housing Professionals (NAIHP) and the National Association of Mortgage Brokers (NAMB) filed legal challenges of the rules last month in U.S. District Court, claiming the Federal Reserve Board lacked the authority to regulate mortgage brokers and that the rules were "arbitrary and capricious."

Mortgage brokers — who work independently from banks, brokering loans through multiple lenders — maintain that the rules favor loan officers employed by banks, and will drive many of them out of business.

The trial court last week denied NAIHP’s and NAMB’s requests for temporary restraining orders and preliminary injunctions blocking implementation of the rules, saying the groups hadn’t demonstrated they were likely to succeed in their challenge.

Both groups appealed that decision to the U.S. Court of Appeals for the District of Columbia Circuit, which issued an administrative stay of the rules on March 31 — the day before they were scheduled to take effect.

In agreeing to stay implementation of the rules, the appeals court said it was not ruling on the legal merits of the emergency motions filed by mortgage brokers. The appeals court gave attorneys for the Federal Reserve until Monday to respond.

Arguing that the administrative stay should be lifted and a motion for an emergency stay denied, attorneys for the Federal Reserve said in a filing Monday that the trial court "properly concluded that the appellants had not shown that they were likely to prevail" in their arguments.

Claims by mortgage brokers that they will suffer "irreparable harm" must be weighed against the likelihood that delaying implementation of the rules would harm consumers by leaving in place a system that rewards mortgage brokers for putting borrowers in higher-cost loans, Fed attorneys said.

"Each day that the rule’s effective date is postponed is another day consumers will suffer this harm, and their injury, too, is irreparable," attorneys for the government said.

The appeals court on Tuesday ruled that NAIHP and NAMB had not "satisfied the stringent standards required for a stay pending appeal," and dissolved its administrative stay of the rule.

The three-judge appeals court panel also denied an emergency motion to stay implementation of the rule pending appeal, and denied a motion for expedited relief that sought to fast-track the appeal process.

NAMB President Michael D’Alonzo declared the group will continue to argue its case in appeals court, vowing on the group’s Facebook page that "This fight is far from over."

The new rules — an amendment to the Federal Reserve Board’s Regulation Z, which implements the Truth in Lending Act — were published in the Federal Register on Sept. 24.

The rules prohibit loan originators from receiving compensation that’s based on any of a loan’s terms or conditions, except for the amount of the loan.

But mortgage brokers say that one aspect of the rules — governing rebates paid by lenders on higher-interest-rate loans — is targeted specifically at them.

The rebates, known as yield spread premiums, can help borrowers cover closing costs including loan origination fees. But Fed policymakers maintain that yield-spread premiums can also serve as an incentive for mortgage brokers to steer borrowers into high-interest loans.

Mortgage brokers say they are already required to disclose yield-spread premiums to consumers, and that banks earn similar "service release premiums" when they sell higher-interest-rate loans in secondary markets.

But the Fed maintains that consumers are often oblivious of the fact that mortgage brokers receive payments from lenders; they tend to think of mortgage brokers as working on their behalf — a "trusted adviser" who will have their best interest in mind when shopping for the best deal among various lender.

Consumers therefore don’t necessarily understand that mortgage brokers may steer them into a loan that provides the broker with the best compensation, instead of the loan that’s the best deal for the consumer, attorneys for the Fed said in defending the new rules.

That’s especially the case when consumers are also paying loan origination fees themselves, the Fed maintains.

When the consumer is making a direct payment to a loan originator, "the consumer could reasonably expect that making that direct payment would reduce or eliminate the need for the creditor to compensate the originator through a higher interest rate," the Fed maintains.

The solution devised by the Fed in the new loan officer compensation rules is to require mortgage brokers to choose one form of compensation or the other. Mortgage brokers must decide whether they will be paid by lenders (through yield-spread premiums) or by consumers, but cannot receive compensation from both.

Groups representing mortgage brokers say that the rule will give bank loan officers an unfair advantage.

"The Board’s decision to regulate mortgage brokers, while effectively exempting creditors that control 90 percent of the mortgage origination market, was arbitrary and capricious," attorneys for NAIHP and NAMB said in arguing for an emergency stay of the rules.

Mortgage brokers, the groups said Tuesday in an appeals court filing, "provide consumers with disclosures that make clear that they are independent contractors, are not the consumers’ agents, and cannot guarantee the lowest price or best terms available in the market."

Historically, when borrowers are seeking the lowest rate on a loan, mortgage brokers have collected both origination fees paid by consumers and yield-spread premiums from lenders, attorneys for NAMB said in their original March 9 complaint.

Banks’ loan officers offer loans with reduced or no upfront settlement costs in exchange for a higher rate on the borrower’s mortgage, and banks recoup those costs by adding a "service release premium" when they sell mortgages with higher interest rates in the secondary market, NAIHP said in a March 7 complaint.

Attorneys for the Fed acknowledged that while loan officers are also in a position of trust, consumers understand that banks’ loan officers work on behalf of a single lender, and will not help borrowers look for better deals from other lenders.

The rule’s intent was "to prevent a loan originator who works with a variety of lenders from steering a consumer to the lender that will pay the loan originator a higher fee," attorneys for the Fed said.

The fact that a bank lender may charge a high rate for a loan to earn a service release premium "does not present the same problem of a hidden conflict of interest," the Fed maintains. Consumers "would naturally expect that the (bank lender) is not his or her ‘trusted adviser’ in the transaction but is representing its own interest."

According to a report in American Banker, major lenders like Bank of America and Wells Fargo are revamping loan officer compensation to eliminate incentives tied to loan terms, including the interest rate. Banks plan to shift to volume-based incentives that reward loan officers for making more, and bigger loans, American Banker said, citing confidential documents.

The Federal Reserve has suggested that mortgage brokers could make similar changes in the way employees are compensated.

Contact Inman News:
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